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Stock Market News for June 29, 2017

Gain in financials and technology shares on Wednesday pushed the benchmarks higher. Financials were led higher by increase in bank stocks on expectations of a positive outcome from the second round of bank stress test results. Shares of major technology companies including Facebook, Apple and Amazon recovered. Additionally, energy shares moved north due to uptick in oil prices after a government report revealed a drop in weekly U.S. crude output. Meanwhile, investors also digested weak pending home sales data.

For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article.

The Dow Jones Industrial Average (DJI) advanced 0.7% to close at 21,454.61. The S&P 500 gained 0.9% to close at 2,440.69, posting its biggest one-day increase since April 24. The tech-heavy Nasdaq Composite Index rose 1.4% to finish at 6,234.41, marking its largest one-day increase since Nov 7. The Dow, the S&P 500 and Nasdaq have advanced 8.6%, 9% and 15.8% respectively on a year to date basis. A total of around 6.7 billion shares were traded on Wednesday, lower than the last 20-session average of 7.2 billion shares. The fear-gauge CBOE Volatility Index (VIX) traded near 10. Advancers outnumbered declining stocks on the NYSE by a 3.18 to 1 ratio.

Financials Boost Broader Markets

Financials moved north on Wednesday, led by surge in bank stocks. The increase in 10-year treasury yields along with increasing spread between shorter and longer dated U.S. bonds helped bank shares to gain. The 10-year Treasury yield increased 2.2%, after touching a one-month high in the earlier session.

Last Thursday, the Federal Reserve had released the Dodd-Frank Act supervisory first stress test 2017 results on last Thursday, which, to a great extent, reflected the stability of the banking system. The test reaffirmed that the U.S. banking giants are adequately capitalized to survive under a tremendously difficult economic scenario. (Read More)

Investors remained focused on the outcome of the second round of stress test results from the Federal Reserve. Shares of major banks rose as expectations heightened that major U.S. banks woul pass these tests successfully, leading to significant increases in shareholders’ return.

The broader Financials Select Sector SPDR (XLF) advanced 1.6%, emerging as the best performing sector of the S&P 500. The index also recorded its largest one-day gain since late April. Some of its key holdings, including JP Morgan Chase JPM and Wells Fargo WFC rose 2% and 2.2% respectively.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Technology Shares Boost Nasdaq

Technology shares staged a recovery on Wednesday, lifting the broader markets higher. Investors seemed to have recovered their faith in tech shares after the tech sector suffered a drop of 1.6% in the previous session. Shares of large-cap technology companies including Facebook FB, Apple AAPL and Amazon AMZN recorded gain of 1.8%, 1.5% and 1.4% respectively. The broader Technology Select Sector SPDR (XLK) advanced 1.3%, emerging as the second best performing sector of the S&P 500.

Energy Shares Gain

Oil prices moved higher after a report revealed actual increase in U.S. crude inventories was less than what the American Petroleum Institute’s report on Jun 27 suggested. U.S. crude inventories recorded an increase of 118,000 barrels in the week ending June 23. The figure came in well below the estimated increase of 851,000 barrels predicted by the American Petroleum Institute.

Moreover, as per the Energy Information Administration’s (EIA) report, weekly oil production fell by 100,000 barrels per day (bpd) to 9.3 million bpd, while gasoline stocks decreased by 894,000 barrels. Gain in oil prices had a positive impact on energy shares. WTI crude prices advanced by $0.50, or 1.1%, to $44.74 a barrel. The broader Energy Select Sector SPDR (XLE) gained 0.6%.

Economic Data

As per the National Association of Realtors, pending home sales index declined for the third successive month in May. The index was recorded at 108.5 in May compared to a revised value of 109.4 in April. The index fell 1.7% compared to its year ago value, marking its second consecutive annual decline.

Shaw Communications Inc. SJR reported impressive financial results for the third quarter of fiscal 2017 (ended May 31, 2017) wherein both the bottom line and top line surpassed the Zacks Consensus Estimate. (Read More)

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